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tv   Bloomberg Best  Bloomberg  July 1, 2017 12:00pm-1:01pm EDT

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♪ scarlet: coming up on "bloomberg best," the stories that shaped the week in business around the world. another global cyber attack causes havoc. most u.s. banks ace the fed's stress test. the gop postpones a vote on health reform. european markets try to stay in sync with central banks. >> the euro and markets have reacted very strongly to a speech by draghi. >> comments in sintra suggest that august 3 is going to be quite a tricky meeting. scarlet: italy commits billions to save two banks. the country's finance minister explains the deal in an exclusive conversation. >> it is not a bailout. everything was done by the rules. scarlet: china preaches openness at the world economic forum.
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the u.s. welcomes trade partners and warns them. the week's best interviews help make sense of a topsy-turvy world. >> there was a notion of china taking on the globalization. >> there is tremendous potential for aviation in india. >> the scenario has improved from the beginning of the year. >> free trade for future growth, future business development. >> you want to make sure is that companies are making investments based on the inherent value of the investment, not on a particular tax scheme. scarlet: it is all straight ahead on "bloomberg best." ♪ scarlet: hello and welcome. i'm scarlet fu. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. the week began with political maneuvering in the u.k. britain's embattled prime minister theresa may moved to shore up her support in
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parliament while pushing the brexit agenda forward. vonnie: prime minister theresa may strikes a deal to keep her grip on power. northern ireland's democratic unionist party will support her minority government on key votes. >> it gives her some certainty through the rest of the week, which is what she will be happy about for now. on thursday, parliament will vote on the legislative program she unveiled last week and now with the 10 lawmakers in the dup, she should be able to carry that through without difficulty. vonnie: speaking of parliament, a short time ago, the impact of the deal on brexit negotiations and the future of e.u. citizens in the u.k. prime minister may: mr. speaker, this is a fair and serious offer. our obligations in the withdrawal treaty in the e.u. will be binding on the u.k. as a matter of international law. and we will incorporate it into u.k. law, guaranteeing we will stand firmly by our part of the deal.
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>> there are areas of compromise. the big sticking point is likely to be the power of the european court of justice after brexit. the e.u. would like it to continue to have a say in british law, arbitrating disputes about citizens rights. the u.k. would like to rid the british of the ecj, and so they're saying that there's no role for the ecj to play beyond brexit. obviously, that is a big area of disagreement and there are others contained in this document. it is going to be something that is negotiated in the next few weeks. >> the ransomware cyber attack has struck firms across the globe. the virus locks computers and demands $300 in payments to allow access. the high concentration of victims are in russia and ukraine, including the russian state run rosneft. british media company wpp and danish shipping giant maersk
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have also been struck. the attack was similar way to last month's strike and use to similar virus and identical demands. >> one of the piece of connective tissue that links the wannacry virus earlier in may and this infection today, it's the main mechanism for spreading is a weak nsa exploit from the u.s. government. that exploit targets a piece of microsoft windows software that has been patched for many months. that is not the only mechanism, but that's the primary mechanism. and it is a reminder to companies that just because that earlier infection was stopped, actually thanks to some careless coding by the hackers, does not mean the future ones will be as easy to stop. and it looks like the attackers took some more care in preparing this set of malware. >> the virus advanced from russia and the ukraine. it kind of went out to europe and ended up in the u.s. it moved on into india with reports it is now moving on to
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china as well. >> so far, there has not been that widespread of an impact in asia. i think that is partly because there is not a stringent disclosure requirement on asian companies as there is in other parts of the world. mark: >> senate republicans have decided to delay a vote on the health care bill until after the july 4th recess. at least five gop senators have said they won't even back a procedural vote on the measure that was supposed to take place this week. kevin: vice president mike pence working capitol hill earlier today trying to muster enough votes for the health care passage, but at the end of the day, the numbers did not add up. the math was not there. >> this is a major setback for mitch mcconnell. he was hoping to get this passed pretty quickly. within really a week of releasing the bill, which would've been a swift effort. but he's still got room to maneuver. he's still got some cards to play. i think he's going to be pulling out all the stops he possibly can.
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the name of the game for conseratives is to make sure they remain energized and that the left does not scorn them. >> we are getting the headlines for the second round of the bank stress tests. 33 banks overall acing the fed's stress test result. capital one has conditionally passed the stress test. so it got the ok, but it must resubmit its capital plan, so it is not a clear passing. >> every time they do this with the qualitative section, the fed is a little vague on what they find fault in. it's prophecies and data collection and all of the other kinds of systemic, how they look at their risk. so they again mentioned the same things, how they are looking at their risk, and they mention one of their biggest, most important material businesses they weren't looking at the risks properly. everyone has passed, even with a conditional, it is a pass. and that means they are going to increase their dividends and
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share buybacks. >> the fed told big banks they have more than enough capital and lender's unveiled how they are trying to generate investor interests. citigroup may purchase up to 50.6 in share buybacks. jpmorgan says it is boosting its quarterly dividend 12% and may increase share repurchases to $19.4 billion in the next 12 months. >> i think the banks thought that regulators asked them to relativemuch capital to the risks involved. the first opportunity they get, to return capital to shareholders one way or another , they are going to do it. >> the symbolism is that the pendulum is probably swinging away from the build up of capital and back toward bringing the capital ratios down. the fact that the numbers suggest that banks are going to pay out all of the money they are projected to earn over the course of the year, tells you that the banks are ready to start reducing the e, the equities in the equation to try to boost returns. pretty good for people who own the stock of those banks.
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>> shares of blue apron made their public debut thursday. but the stock gave a muted performance in its first day of trading, literally unchanged by the end of the session after the company lowered its ipo price to $10 a share from an initial range of $15 to $17 a share. what happened, how much does this have to do with amazon and whole foods? >> a good bit does have to do with amazon and whole foods. looking at the trading today, the fact it was unchanged, it was unchanged, and close at $10 a share. we had an aftermarket trade at $9.95. below the ipo price. it seems like there is a bit more investor concern baked in as well. mark: the market story of the week -- treasuries heading for their biggest weekly loss since march and stocks, theit worst -- they worst week in two months. >> i think that the bond market has been telling us we will be in a modest growth, modest inflation environment for quite
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some time. it has also been telling us six hikes in two years from the fed is a headwind for the economy, not a reflection of an accelerating economy. so for us, stock valuations are a little stretched here. we are looking for the market to finish this year, 4% to 6% lower than where we are right now. we do not think this cycle is over, but i think the second half of this year, there is multiple headwinds that will be a little bit of a problem for stocks. >> the 100 most expensive stocks in the s&p out of the 500 are, have only been more expensive relative to the rest of the market in 1999. so, you could easily see a significant correction in those. that is where all of the capitalization is. scott's right that there's the possibility of that 5% or 6% drop but it would be centered in the expensive stuff we might have seen the beginning of that in the last two or three weeks. that's the beginning of what the trading has looked like. scarlet: still to come, as we
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review the week, italy arranges the rescue of two struggling banks, but the finance minister insists it is not a bailout. plus, ceo's talk about the new reality of protectionism and how they are working around it. and up next, more of the week's top business stories. the world's largest food company becomes a target for activist investors. >> a rather long wish list that we saw coming out last night, saying they should make acquisitions. scarlet: this is bloomberg. ♪
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♪ scarlet: this is "bloomberg best." i'm scarlet fu. let's continue our global tour of the week's top stories with a european regulator coming down hard on a u.s. tech giant. >> google has lost its biggest regulatory battle with a record $2.7 billion fine from the e.u. following a seven-year investigation into the company's comparison shopping service.
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that is the biggest ever competition fine from the european commission, doubling the previous record handed to intel back in 2009. you look at amazon, they are doing incredibly well. ebay, likewise. where's the evidence the competition has suffered materially? >> what we have found and studied intensively, i think with 5.2 terabytes of data, is that there is a very close relationship between visibility and traffic, and traffic and revenue. so, what you see is that google has taken advantage for its own shopping comparison on the cost of its rivals. and being able to do so by misusing the dominant position in general search. and that is the key of the case. francine: italy has approved emergency rules for two ailing banks in the northern region, mobilizing as much as a 17 billion euros to liquidate lender's and sell their good
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assets. on friday, the european central bank declared the lender's failing or likely to fail and said both would be wound up under italian insolvency rules. what does this tell us about how lenient the commission and the e.u. are when when it comes to bailing in? and what does it mean for just italian banks? >> i think first of all we have to say the bail in-laws make a lot of sense. everybody believes it is a more political way to go forward. but i think you have to get to a starting point before before you can actually apply those across the whole marketplace. i think it is really clear italy has its own idiosyncratic problems around senior debt holders and the e.u.'s having to get italy to this point in time where they can say, from now on, it is bail-ins. this is what we will be seeing here. >> takata's filed for bankruptcy at home and in the united states, claiming liabilities of $10 billion and confirmed the sale of its core business to key
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safety systems for $1.6 billion. >> for car owners, it is good news because it does mean the company will continue to operate and that it will continue to produce the airbags needed to replace those. the takeover by key safety systems means there will be new investment in the company in order to produce the massive number of airbags needed to replace the faulty ones. bond holders, less good news for them. as well for companies that have all kinds of liabilities with takata. you know, now that they are a bankrupt entity, there is less money in the pool for them to pay out on those, so there will be a big gap between what their liabilities are and the cash they have on hand. and that will have to be worked out in court. >> nestle is coming under pressure from activist investor dan loeb to sell a $27 billion stake in l'oreal. the aim is to get them to shed underperforming assets in high growth areas.
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>> a rather long wish list we saw coming out last night saying they should make acquisitions. at the same time, they should shed underperforming assets. nestle is a huge company with 2000 brands, there are lots of areas where they can probably improve and he says as much. he wants them to improve their margin. many areas where he sees opportunity and he says there has rarely been a case where there are so many areas where you can improve and that is why he has gone in. >> nestle has announced a $21 billion share buyback and says it is looking for acquisitions days after dan loeb called for a shakeup. >> is this nestle buying time or giving in, or pursuing a plan that it already had in place? >> it's quite dramatic doings on the shores of lake geneva two days or less after dan loeb bought in. so it certainly looks like they are moving aggressively to respond, whether this was, how long this was in the works, we don't know exactly at this
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point. but clearly they are signaling a willingness to engage with the activist and with other investors. francine: shares of the rental car company avis jumping 21% after it reached a deal with waymo, the self driving car unit of alphabet. the service will manage the fleet of about 600 cars in phoenix. avis competitors' shares like hertz are up 13%. what will the terms of this deal be? what is required of avis? >> right. a pretty small deal. we saw people on twitter are joking that avis is just changing the oil for the cars. they are doing just service and storage, but it does show the reason i think that hertz's stock jumped today, is it shows that the rental car companies could play a significant role in this fleet and could play a significant role. >> earlier this hour we learned
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that apple is working with hertz, testing self-driving technology in a small fleet of lexus sport utility vehicles. >> apple is leasing some of these lexus suv's from hertz, the traditional fleet management unit. so that came on the heels of the avis report that we did earlier today. so we put out the apple story this afternoon, and as we noted the shares are moving quite a lot on it. >> the bank of england governor mark carney has planned along with his financial stability team to increase capital requirements by 11.4 billion pounds to tackle risk posed by consumer credit growth and prepare for uncertainty of brexit talks. mark: did the boe buy stealth, announce a tightening of conditions today, policy today? >> it did, in a way. there has been a big split on the monetary policy committee recently. and carney, of course, sits on
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both the mpc and the spc, which looks at financial stability and which took the decisions today. and by raising the capital buffer, that's in essence, tightened conditions a bit. so it kind of gives carney more leeway in terms of holding off on any changes in monetary policy come august. mark: a lot of action in the currencies as we hear from the global central bank leaders in portugal. the euro's rebounding after falling to a new low against the dollar after the ecb said the market misjudged president mario draghi's speech. meanwhile, the pound rising as boe governor mark carney says removal of some monetary stimulus is likely to become necessary. >> the euro and markets have reacted very strongly to a speech by draghi yesterday. they euro depreciated, bond yields have gone up, all of this is putting in danger the progress that the ecb is doing.
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it was sort of a message control. it is a way of saying that draghi is not signaling any imminent tapering. mark: mark carney now saying the bank of england may need to begin raising rates. earlier, week ago, he suggested he was not in that camp. >> his comments today now suggest that august 3 will be quite a tricky meeting. i'm not sure you will get a rate hike. we are getting close to that point where the trade-off between tolerating higher inflation may not be worth it anymore. jonathan: rupert murdoch's 21st century fox inches closer to securing sky in the u.k. the first we learned from the u.k. government there were a -- they were inclined to refer them to a regulator and then we heard from the regulator that they see no broadcast standard concern. is mr. murdoch a happy man for the news out of the u.k. today? >> it is really interesting to see the sky shares surge.
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i think they are surging because this is not the worst case scenario for fox with its proposed takeover of sky. the worst case scenario is an outright rejection. what the government has said is that they are planning, they are minded to review this for additional regulatory review which could take another six months but it is definitely not the worst case scenario. >> walgreen food alliance has scrapped its merger agreement with rite aid which was being reviewed by regulators. instead, it will buy 22 rite aid -- 2200 rite aid stores. and those stores will be converted to walgreens. walgreens will pay rite aid a $325 million termination fee. >> it's always been obvious the remedies walgreens and rite aid put in front of the regulators were insufficient. they pushed back the time for getting this done again again and again. what they have come out with today is interesting. they said we are going to do a deal but we are going to only buy a small proportion of stores
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rather than buying the whole company. the really interesting question is what happens to the rest of rite aid? ♪
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♪ scarlet: you are watching "bloomberg best." i'm scarlet fu. the health of italy's banking sector under scrutiny as the government allowed the second-largest lender to take over the good assets of two failed banks for a token amount. bloomberg's mark barton discuss the deal exclusively with the italian finance minister. mark: one of our columnists wrote earlier, this is a bailout that nationalizes losses and privatizes gains. weren't banking rules meant to stop this?
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>> i totally disagree with that statement. it is not a bail out, and everything was done by the rules and it is a national liquidation of two banks declared failing or likely to fail by the ecb. mark: would you not say that those who claim that this unwind we'll call it undermines confidence in the banking union project? >> i don't think so. as i said, we negotiated the rules with the european institution. the ssm, srb, digi competition. digi competition has stated yesterday that state aid is totally legal in this case. so there is no disruption of the rules whatsoever. mark: ok, it's legal, but a week or two ago, spain's popular went down a different route. it was wound down without state aid. how are these two italian lenders different from banco popular?
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>> well, i think there is a difference between banco popular -- but between santander and the italian banker decided to come in an acquire the good assets of the bank's subject to liquidation. but with the clause that the capital ratio of the acquiring bank would be kept unchanged by the operation. so while on the other hand, banco santander had to raise 7 billion euros to raise capital to leave the ratios unchanged. mark: so you do not accept the accusation that some have level today that this unwind or whatever you want to call it leads to a non-level playing field in europe? >> absolutely not. this is capital neutral. so, the position of the bank has not changed from that point of view and as i said, given the
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fact that this is a liquidation according to some specific rules, it was deemed to be totally legal from the point of view of state aid rules. so this is not exactly because it is not changing the level playing field, the playing field that we had, that we had the assessment by digi competition. mark: finance minister, regardless of what you say, there are concerns. there are concerns in germany. might this hinder further eurozone integration as some have suggested today? >> i totally disagree with that statement as well. have strengthened the banking union and we are working to make it stronger. ahead, whataight the weeks compelling conversations, including the conversation known as the davos of asia. and trade is on the list, along
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with tax reform. >> for us to be competitive, it is essential we work very hard with them. scarlet: this is bloomberg. ♪
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♪ >> where we see the biggest risk is that as we roll forward, there are going to be changes in government policy, public policy will be made in may, that has an effect on industries. think of german utilities a few years ago as one example. they will be changing technology. this will shift the competitive landscape quite quickly. and there will be potentially a pull forward in anticipation of such changes. who is going to win, who is going to lose, who is going to benefit, who is going to be
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penalized? if i'm allocating capital, i want to know where is the information to make those judgments, and i want some perspective on who is thinking about this so i can make those qualitative judgments about management and risk management but also not the value. scarlet: that was mark carney discussing climate change with francine lacqua. he helped launch climate related financial disclosures, which is chaired by michael bloomberg, founder and majority owner of bloomberg lp. the chinese premier asserted the need to combat climate change in his speech at the world climate economic forum. he talked about china's changing role in the global economy, a topic stephen engle discuss with several guests. stephen: what did you take away from the premier's speech, almost a carbon copy of previous
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speeches, saying china can withstand all of these challenges, they will meet their targets, there will not be any hard landing? >> on the domestic side, i think china was sending a very soothing message but also a very clear point the lead up to the party congress in november, to maintain financial stability, they would do whatever it takes. next year is the year to be concerned about because we might see some unpredictable consequences and some of the problems could come to a head, but this year is secure. what is even more interesting about the speech is the international aspect because if the beginning and throughout, there was a notion of taking on the globalization mantle. a notion of free flows of capital. all of these have permeated his speech, whether indeed or not we will see them, in principle china wants to take on this notion that it is promoting
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globalization and it is all for it. scarlet: a number of leading ceo's also spoke with bloomberg this week. let's begin with bmw's chairman. he visited the u.s. to announce a major spending increase that will create about 1000 new jobs at the south carolina plant. he told matt miller bmw considers the united states it second home. harald: the united states is still a very important big market for us. being successful in south carolina is a part of the long-term plan. matt: this is not just about the united states as a market. you touch so many jobs and export 10 billions of dollars in cars, more than any other manufacturer. have you explained this to president trump? harald: i did when i was visiting with the president and his administration.
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we are the biggest exporter, 70% of our production goes to the work. that was clearly explained, and the investment and great people we have here, the commitment, the passion, that was well received. but we also need free trade. matt: do you think he understood those arguments because even if you met with him at the white house, he went to brussels and told his counterparts the germans are very bad, bmw sells millions of cars here and he wants to put a stop to that. does that worry you? harald: i am not concerned. this does not worry me. just the facts and our partners in south carolina, it is a great achievement which is acknowledged as well. we need to retrace for future growth, and we need to explain that further. i sure we will have a good
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am relationship with the new administration. >> tax reform is critical for us. for us to get rid of the anomalies causing things, i think the way companies are thinking about where they will be based, for us to be more competitive on a global basis, it is essential that we are working very hard with them. as we think, our capital allocation strategy is focused on what our strategy is very -- strategy is. we look at dividends, because we know where our investors are depending on us. we have $9 billion in research and development, and we make sure after that we are always on the look for new technologies we can acquire. 50% is external. then we look at other things like what about buybacks to make sure we are making more use of that. when we do those acquisitions, we try to make sure we are doing
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them in an appropriate way. david: the tax rate is over 20%, roughly. if the tax rate comes down to 28%, does that change johnson & johnson at all? alex: the more important issue is the flexibility it gives to capital employment. you want to make sure there are companies making investments based on inherent value, not the tax scheme. lotgs such as inversions, a of that is taking place because companies are being rational based on the tax rate they can be. another example would be how competitive you are on a particular acquisition. if a company out of europe can pay a lower tax rate, it may exclude us from being able to acquire technology for the future. >> indian companies today are creating huge jobs for americans in america. a company like this one, the one
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i own, that company has recently placed an order for 205 aircraft with boeing. this deal is worth $22 billion, the u.s. department of commerce, it creates 132,000 high paid u.s. jobs within the united states of america. so companies like ours are contributing greatly to president trump's america first program, and i think it is important americans understand how much we can do for the american economy. anna: you mentioned the planes you have ordered. i wanted to ask you about that. do you think there was too much capacity on the indian domestic markets, and are you going to put it on the international weight? ajay: india is the fastest-growing aviation market in the world. despite the group, only 3% of indians fly today. there is tremendous potential. we will fly these planes
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domestically and on international routes. to seveny fly countries, and we hope to fly to many more as these planes start coming next year. tom: there is increased skepticism now that the administration will be able to pursue its infrastructure spending plans. you see that in the imf producing its forecast in the u.s. how much of a missed opportunity is this? ulrich: the infrastructure situation long-term, the u.s. needs to invest in energy infrastructure, the road system, to really have a competitive platform going forward. at the moment, it looks like there are some ripples in the system. it is not going as smoothly as it did at the beginning of the year. my vision is it will be sorted out very quickly, and the system gives investment a good platform
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to really lift going forward. tom: to what degree do you see reduction in political risk in europe given the election of president macron in france, or does the question of brexit overshadow all of the perceived risk and the positive economic fundamentals we are seeing in europe? ulrich: the risk scenario has improved from the beginning of the year. the beginning of the year, we did not know how france would come out, the german situation was faulty at that time, and you had brexit. france is now sorted out, we know how the french government will be. it looks like in germany, the predictions are also that it will be a quiet environment. the brexit is unfortunate from our perspective, but it will create a lot of uncertainty, insecurity, something we have to overcome as politicians and entrepreneurs going forward. altogether towards the end of
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this year, i would expect europe to be quite stable going into the next year. ♪
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♪ scarlet: this is "bloomberg best," i'm scarlet fu. the standoff over health care legislation in the u.s. and palminteri positioning in the u k were two of the stories that affected markets around the world this week. let's go to the other stories in washington where the court to be -- the highest court made a decision on the proposed travel ban. anna: the u.s. supreme court partially revised president donald trump's travel ban and said the justices will hear arguments in the fall, so partial victory in partial fall? -- partial loss? greg: i will go with a partial
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victory given the lower courts that have ruled against him. this is not a ruling on the merits of this, but the supreme court did say the president had a strong interest of protecting the borders for reasons of national security. at least when we are talking about people who do not have connections in the u.s., at least with regard to that, we will err on the side of letting the president enforces travel ban. >> it is one of the most sweeping security upgrades, but stopped short of the threatened than -- ban on large electronics in cabins. what does it mean? i am going to new york, what am i seeing? >> more enhanced security for one. the reaction has been positive because it creates a measure of certainty. it will affect 325,000 travelers
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a day, but it will not prevent travelers from bringing laptops , which had been proposed before, so travelers will have enhanced measures. the department did not specify. we can expect maybe longer lines. the reaction has been positive because of uncertainty for the industry. haidi: president trump and narendra modi have wound up their talks. it was not all hugs and handshakes. ramy: there is talk whether he is trying to replicate the bromance he had with mr. obama in the past few years of his presidency. donald trump: i look forward to working with you, mr. prime minister, to create jobs and grow our economies and to create a trading relationship that is fair and reciprocal. ramy: you are looking at the trade deficit with india over the past few decades. it has been increasing, the more
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red, the more deficit. precious metals, $7 billion according to u.s. trade offices, machinery and agriculture. on the topic of machinery, there is some sales going on. for example, american planes are heading over to india, about 100 or so. no timeline. donald trump wants india to sign a deal on american national gas and wants to raise the price. there are a couple of things the white house does have to authorize. they have already authorized line companies. one is drones. another is the joint production of f-16s, which is lockheed martin. scarlet: treasury secretary announcing increased sanctions related to north korea. the treasury secretary prohibiting financial institutions from maintaining conclusions after that lender has acted as a gateway for money laundering by north korea.
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>> the reality is it does seem to be an effort to send a message to china. treasury secretary's comments came a couple hours before the u.s. also announced it would approve a $1.3 billion arms package to taiwan. it is another sign the honeymoon between the trump administration and china is over. vonnie: president trump making some comments on trade, saying the u.s. cannot allowed trade deficits to continue. he says he and south korean president moon have a lot in common on trade. donald trump: south korea is giving big orders to the united states, as you know the military, as many as 35 fighter jets will be bought from lockheed and other military equipment at a level they have never reached before. things like that will break down the trade deficits. we appreciate it very much. mark: president emmanuel macron
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taking a step toward loosening the labor market. they will make it easier for companies to fire employees and have to negotiate their own deals with employees. >> what he is trying to do is to go further than any labor reform that has been done in the past. so he wants to lower the cost of hiring and lowered the cost of firing, making it simpler, making it easier to negotiate at the company level rather than having everything centralized by a union and industry agreement. and finally he wants to make it easier to fire someone by tapping severance pay. shery: this weekend marks 20 years since the union flag came down in hong kong and it returned to chinese rule. president xi is making his first
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visit to mark the occasion, and thousands of police have been deployed to make sure any protests are quiet. yvonne: he had a softer touch in his opening remarks in hong kong. he said hong kong has always been in his heart, although there were some thorny moments when he met with the outgoing executive, praising him for clamping down the small and independent movements that were a big political force during his term. as well, some of those journalists when they first meet with xi jinping talked about the fate of a chinese jail. this is a nobel peace prize winner after she was transferred to a different hospital for further cancer treatment. xi pretty much ignored that question and walked out. it underscores the fact that the president may not actually be dealing with critics first face-to-face this weekend. scarlet: from political
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disruptions to disruptive innovation, boxed is a three-year-old company that has combination of the low price model with the convenience of online shopping. with more than $100 million in sales and $130 million in venture funding, the formula seems to be working. the chairman chieh huang explains how they went from small to big. ♪ chieh: boxed is an online warehouse club. we cut out the membership fees and we deliver right to you. generally it is two days. i grew up in the suburbs of new jersey and then moving to manhattan later in life, i did not have a car. i thought, how many other folks around the country have that problem? i moved back into the burbs to start the company in a small two car garage in central jersey, we went after and tried to solve the problem. in the early days we did not have a marketing budget. it was virtually zero.
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it forced us to create very good service with those who talked about it. people loved the service. sure enough they talked about us, and we capitalized on that opportunity, went on and raised financing. we moved out of the garage. the gigantic challenge we had came up when we started expanding our footprints around the u.s. we had to make a decision of our we short-term or long-term? treating people right is so easy -- is short-term, meaning it is so easy to take away benefits, we pay minimum wage. you see the instant pop on your financial statement. i don't think is a long-term way to drive business. we took the long road. whether it is your first day or you are the chief marketing officer, we are one team and need to treat everyone fairly. in the short run, there might not be a line for increased morale and sense of team, but over the long run, it pays huge
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dividends. to this day we take that road and have become who we are. folks have chosen to spend their money with us in pretty large amounts because we do the right thing. our fulfillment footprint is more locations throughout the united states, centers, and three offices and a lifetime spent on airplanes these days. last year was our third full-year in business. we went from virtually zero in the first year to overnight the years in the third year, so it has been a dream of mine to push the button at the new york stock exchange. we have identified and area where there is a lack of solutions. for us, it is staying focused, not trying to be the everything store. doing wholesale and doing it right. ♪
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♪ scarlet: i want to just pull up james' bloomberg function we have, which shows you the different customers of takata. the big customers domestically for takata, honda, ford is the next biggest, general motors, toyota rounding out the top four. the bloomberg features about 30,000 functions, and we always enjoy showing you our favorites. maybe they will become yours. here is another function you will find useful, quic . it will take you to our quick insighthere you can get into timely topics. here is one from this week. reporter: u.s. supreme court justices are supposed to be protected from the pressure of election cycles. but in recent years, some decisions by the highest court in the land become more polarized, and approval ratings
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are sliding. a year-long vacancy highlighted this. here is the situation. in the last year of his presidency, barack obama nominated federal appeals court judge merrick garland to replace antonin scalia. he died in february 2016, but republican senators refused to hold confirmation meetings with judge garland. president obama: i nominated judge merrick garland three months ago, but most republicans so far have refused to even meet with him. reporter: in this bold move, the gop was betting a republican president would get back in the white house, and their bet paid off. donald trump: i, donald j. trump, do solemnly swear -- reporter: on april 7, they confirmed neil gorsuch to fill the vacancy on the supreme court. since his confirmation, he has asserted his place on the far right of the court, delivering on president trump's promise, of maintaining the conservative
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supreme court's, potentially for a generation. donald trump: and i got it done in the first 100 days. that is even nice. reporter: republicans have controlled the nine-member court since 1969, leading to 5-4 decisions that extended individuals rights for guns, corporate campaign spending and class-action lawsuits. the supreme court can shift the political direction. with their appointment, presidents can lead a nation long after their term ends. that is why in recent years, they have selected justices whose convictions are not likely to shift. justice gorsuch: i will not forget to whom much is given, much will be expected. reporter: where much of major rulings are the products of votes, the 5-4 split has been rising. chief justice john roberts said this could undermine the court's legitimacy and it transcends politics. and the slow turnover made the
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-- means the lag for the changing demographics. half of the justices are still white men. another big concern, no recourse when justices appeared to violate ethical standards or cases where there are conflicts of interest. lifetime appointments made justices able to still work after strokes. one solution is to give term limits to justices. in a 2015 poll, americans favored term limits. -- favorite a 10 year term limit. they would require a constitutional amendment, a high bar to clear. so until there is more compromise in washington, change seems unlikely and the highest court in the land could face division and challenges to its public approval. scarlet: that was just one of the many quick takes you can find on the bloomberg. you can find them at bloomberg.com, along with all of latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week.
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thanks for watching, i'm scarlet fu. this is bloomberg. ♪
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in basketball you have michael jordan, i would not be to retire. class when you have a $400 million gift do you have to write a check? >> yes. >> only to say is the most favorable memory you have? >> would you fix your time? >> people would not recogni

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